Professional Documents
Culture Documents
Company Car Policy
Company Car Policy
1. Objective
The new Company Car Policy has been formulated in order to introduce an employee
friendly and easy to administer car scheme in the company with effect from April 1,
2006. With the introduction of this scheme all previous car schemes stand withdrawn.
2. Scope
Employees in Grade M1 and above are entitled to participate in this scheme. These
employees have been assigned Management Allowance / Car Kitty as part of their
remuneration package. Their Management Allowance / Annual Car Kitty amount is
given in the table included herein below.
(A)
(B)
(C)
Grade
Car Kitty
(p.a.)*
Rs.
Amt
Mgmt.
(p.m.)
Allow.
Rs.
(D)
(E)
Addnl.
Car
Kitty(p.a.)*
Rs.
Rs.
M5
240,000
20,000
60,000
300,000
M4
195,000
16,250
45,000
240,000
M3
150,000
12,500
45,000
195,000
M2
105,000
8,750
45,000
150,000
M1
75,000
6,250
30,000
105,000
In the case of employees joining the Company Car Scheme post July 1, 2006, actual
Car Kitty amount shall be net of Fringe Benefit Tax (FBT) as applicable.
3. General
3.1. Under this scheme eligible employee can avail of a leased car for both official
duties as well as personal use. For this purpose, the company has entered
into an agreement with a lease finance company. The details of the same
have been provided in the Annexure I.
3.2. Eligible employees would be entitled to a car with a per annum cap on lease
rent equivalent to their annual car kitty entitlement included in their
remuneration package.
3.3. Employees can select any car of their choice within their lease rent
entitlement limit.
3.4. Full finance is available without any margin money requirement. The amount
that can be rentalized includes the following:
Page 1 of 18
3.4.1.
3.4.2.
3.4.3.
3.4.4.
3.4.5.
However, the minimum amount that would need to be rentalized is the ExShowroom cost of the vehicle.
3.5. In case accessories are bought from some other dealer, the VAT Invoice from
that dealer will be required.
3.6. At the end of the Lease Term, the car will be returned to the leasing company.
4. Standard Operating Procedure:
4.1. The process starts with the employee getting an In principle approval of
his/her respective HOD vide e-mail on a model that falls within his/her car
kitty entitlement limit.
4.2. Employee negotiates with the dealer to get the best deal possible and gets a
formal quotation in the form of Proforma Invoice.
4.3. Employee then submits to the Admin Department. an application for joining
the company car scheme in the prescribed format as per Annexure II
enclosing the Proforma Invoice and the e-mail approval from HOD.
4.4. Employee also executes an Undertaking on Rs. 20 Stamp Paper (refer
Annexure III) and submits the same to Admin Department.
4.5. Admin gets the approvals from Finance on the Application Letter and retains
the original Application Letter and Proforma Invoice for their records.
4.6. Admin intimates the Lease Finance Company vide Authorization Letter as per
Annexure IV enclosing a copy of Proforma Invoice.
4.7. The Lease Finance Company then sends the following to the Admin
Department.:
4.7.1. Cheque in the name of the Dealer
4.7.2. Covering Letter to the Dealer
4.7.3. Letter for Endorsement to the RTO
4.7.4. Form 20 for signature of Authorized Signatory
4.8. Commencement date for the lease period under the scheme shall be the date
on which cheque is drawn in favor of the dealer by the Lease Finance
Company.
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4.9. Admin gets the required signature on Form 20. Admin hand over the following
to the employee to take the delivery of the car:
4.9.1. Cheque in the name of the Dealer
4.9.2. Covering Letter to the Dealer
4.9.3. Letter for Endorsement to the RTO
4.9.4. Form 20 with approval from Authorized Signatory (CFO)
4.9.5. Copy of ABCs PAN Card
4.9.6. Companys Address Proof
4.9.7. Letter of Authority to take the delivery of the car (Refer Annexure V).
Admin retains a copy of all the above documents.
4.10.Based on these documents employee can take delivery of the car.
4.11.On receiving the delivery of the car, the employee needs to forward the
following docs to the Admin Department.
4.11.1.
Original Invoice
4.11.2.
4.11.3.
Copy of R C Book
4.11.4.
4.12.Admin Department retains a copy of all the above documents and sends the
Original Invoice and copy of the other three docs to the Lease Finance
Company.
4.13.The Lease Finance Company then sends the following to the Admin
Department:
4.13.1.
Lease Agreement drawn in triplicate (One Original and two
copies).
4.13.2.
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Page 4 of 18
If the employees car kitty entitlement changes due to promotion, the difference
between the new monthly car kitty entitlement and monthly car lease rent
would be added to his/her Personal allowance and paid out with salary on
monthly basis. This would be treated as income and taxed accordingly.
7. Transfers
In case of inter-location transfers, within the company, the leasing company will
organize all the necessary formalities. The concerned employee will be required
to contact the Administration Department at HO to initiate necessary processes.
In case of transfers to a subsidiary / affiliate / sister company, the car can be
assigned to the new company wherever the new company also has an
agreement with the said Lease Finance Company.
The transfer charges will be borne by the company if the transfer is company
initiated and by the employee if the transfer is employee initiated.
8. Rejoining the Car Scheme
On completion of the tenure and on returning of the car to the Leasing
Company, the employee will be entitled to rejoin the car scheme immediately
thereafter.
9. Overall Co-ordination/Clarification/Suggestions
6.4. Car Scheme will be co-ordinated on an all India bases by the Administration
Department in Head Office. The department shall maintain an MIS pertaining
to the scheme.
6.5. All clarifications with regard
Administration Department.
to
the
scheme
can
be
obtained
from
6.6. All suggestions for improvement of the scheme should be addressed to the
Administration Department.
ANNEXURE I
Page 5 of 18
1. The company has entered into an agreement with M/s Sundaram Finance Ltd., a
Lease Finance Company to make available a leased car to the eligible employees
of the company.
2. Employee has an option to choose tenure ranging from 3 yrs to 5 yrs. Current
Lease rentals for the same are indicated in the table below:
Tenure
Resale Value
3 Yrs
25 %
Rs 2705
4 Yrs
20 %
Rs 2230
5 Yrs
15 %
Rs 1930
* Please contact the Admin Department. for the latest Lease Rentals applicable.
3. The above rentals are based on the current SBI PLR. There could be a variation in
the rentals due to variation in any of the following:
SBI PLR ( In this regard please note that, there has been no increase in
this benchmark interest rate in the past 5 Yrs)
Pattern of payment
: Rs.2,705/-
: Monthly in advance
Page 6 of 18
per
lac
for
Page 7 of 18
Rs.
0
27
6
12
18
24
23
21
25
19
3.2. Given below is the variation table for the 4 year option:
Tenure
: 4 years
Rent (per month per lac)
Pattern of payment
: Rs.2,230/-
: Monthly in advance
Page 8 of 18
per
lac
for
Page 9 of 18
Rs.
0
26
6
12
18
24
21
19
30
36
23
17
15
13
3.3. Given below is the variation table for the 5 year option:
Tenure
Rent (per month per lac)
Pattern of payment
: 5 years
: Rs.1,930/: Monthly in advance
Page 10 of 18
0
6
12
18
24
30
26
24
22
20
18
16
36
42
15
48
14
13
3.4. The quantum of change in rentals indicated above is for every half percentage
point change in the cost of funds to the lessor keeping the other parameters
of the lease at the present level.
3.5. In the 3 year option, the variation in rental for any 0.5% p.a. change taking
place after the 24th month shall remain Rs.19/- per month per lac till the end
of the lease period.
3.6. In the 4 year option, the variation in rental for any 0.5% p.a. change taking
place after the 36th month shall remain Rs.13/- per month per lac till the end
of the lease period.
3.7. In the 5 year option, the variation in rental for any 0.5% p.a. change taking
place after the 48th month shall remain Rs.13/- per month per lac till the end
of the lease period.
3.8. Any change in cost of funds to the lessor taking place between two periods
indicated in the table above will entail change in rentals to the extent of
change in rentals indicated at the beginning or at the end of the said periods
or any magnitude falling in between depending on the exact point in time the
change takes place.
3.9. The magnitude of change in rentals indicated above shall be applicable from
the immediate rental next falling due and shall be applicable on all the future
instalments of the rentals.
4. Stamp Duty
4.1. Stamp Duty cost is also applicable on the Lease Rent Agreement. This amount
varies as per the rates applicable from state to state.
4.2. The current Stamp Duty rates in various states are listed below:
Orissa
Rs.10/-
Tamilnadu
Kerala
Karnataka
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Andhra Pradesh
Rs.100/-
Maharashtra
Gujarat
Delhi
Rs.50/-
Madhya Pradesh
Rs.50/-
Uttar Pradesh
West Bengal
Rs.50/Rs.20/-
Haryana
Rs.20/-
Goa
Rs.20/-
Pondicherry
Rs.20/-
4.3. The same will be recovered from the employees salary on receiving delivery
of the car.
5. Once lease rentals exceed the car cost, 12.5% VAT will be applicable on the lease
rentals and EMI would be enhanced to that effect
5.1. Second year onwards, Insurance will be done by the employee. In case the
employee opts for insurance cover by Royal Sundaram or Oriental, the
Sundaram Finance can take care of renewals, but the cost has to be borne by
the employee.
6. Foreclosure
6.1. In case of foreclosure, value would be arrived at by discounting the balance
rentals and the resale value considered in the package. The discount factor
would be the prevailing SBI-PLR (Current PLR is 10.25% p.a.)
6.2. However, if the leasing company obtains the sale proceeds of the vehicle, the
employee will be liable to pay only to the extent the net sale proceeds are
less than the foreclosure charges.
Page 12 of 18
ANNEXURE II
Application to join Company Car Scheme
Name:
_____________________
Department: _________________
Designation: ________________
E-Mail Id:
Mobile No:
___________________
__________________
Date:
________________________
To,
The Administration Department.
Kind Attn: Mr. R K Attal
Sub: Request for a car under Company Car Lease Scheme
Dear Sir,
I request you to provide me a car as per the following details. I have read the rules
governing the scheme and agree to abide by the same and amendments, if any, to
the same.
Yours faithfully,
Name and Signature of the employee
DETAILS OF CAR
Car Make/ Model
Car
Kitty
Eligibility
per
annum
Desired Date of Delivery
Option
Tenure /Resale Value
Current Lease Rental plpm
(A)
Heads
Option 1
3 Yrs / 25%
Option 2
4 Yrs / 20%
Option 3
5 Yrs / 15%
Cost
To be
(Y/N)
Cost
to
Rentalized
Rentalized
Page 13 of 18
be
Insurance
Registration
Octroi / Other Taxes
Cost of Accessories
Total Cost to be Rentalized (B)
Monthly Lease Rental [(A*B)/100,000]
Copy of e-mail having HODs approval attached herewith
Manager-Admin
Yes
No
CFO
ANNEXURE III
(To Be Executed on Rs. 20/- Stamp Paper)
UNDERTAKING
: __________________ _____
Residential Address
_______________________
_______________________
_______________________
_______________________
Page 14 of 18
Dear Sir,
Car Scheme
In consideration of your having admitted me to the company's car scheme and
provided me with car ( No.,________________
Make __________________ )
hereinafter called "the car" with effect from ______________ on the terms and
conditions of the said scheme, I undertake to the Company as follows :1) I have read all terms and conditions of the scheme and I agree to, accept and
abide by all the terms and conditions laid down by the Company in the Car
Scheme and amendment if any, thereof.
2) The car is registered in the name of the Company, but shall remain the property of
the Leasing Company.
3) In case of any dispute, which may arise between the Company and me, the
Leasing Company will have the right to re-posses the car any time during the
leasing period.
4) I shall use the car only for my personal and official use. I shall not put the car to
use on hire or reward and shall not use the car for any unlawful purpose.
5) In case of my separation from the Company for any reason whatsoever including
resignation, retirement, VRS, dismissal, etc., I hereby agree to bear the
foreclosure charges and hereby authorize the company to adjust the said charges
from my terminal dues and in case of shortfall if any I shall forthwith make good
the same to the Company.
6) Not withstanding the aforesaid, I / my legal heirs shall be personally liable to pay
to the Company all amounts due from me under this scheme and to pay the same
to you on demand and without demur and notwithstanding any dispute/ difference
that may be subsisting between me/ my legal heirs and the Company.
7) The agreement shall bind in all respect heirs executors legal representatives and
myself. I further agree that the Company shall have the same rights against my
heirs, executors and legal representatives, as it has against me under this
agreement.
8) I understand that on execution of this Undertaking, monthly pay out to me out of
my annual car kitty entitlement will stop.
9) I had been given two salary structures viz. With Car and Without Car in my
initial offer letter / at the time of my salary review. I understand that once I join
this scheme, the With Car structure will come into effect from the month in
which the car lease period starts and same shall be applicable during the period
that I am part of the scheme.
10)However, in case the monthly lease rent is less than the one twelfth of the annual
car kitty entitlement, the differential amount would be added to the Personal
Allowance and paid out to the employee through salary on a monthly basis. The
said amount would be taxable.
Page 15 of 18
11)The scheme would be governed by the tax regime as applicable from time to time,
and any implications thereof would be to my account.
Yours faithfully,
Witness: _________________________
Signature________________________
Name: ___________________________
Address: ________________________
__________________________
ANNEXURE IV
Authorization Letter to Lease Finance Company to make the payment to the
dealer
Date:
Sundaram Finance Limited
95, 9th Floor,
Maker Chambers III,
Nariman Point,
Mumbai 400 021
Subject: Car for <Employee Name>
Dear Sir,
With reference to our leasing arrangement for cars, please find enclosed the proforma
invoice dated ___________ raised by <Dealers Name>, amounting to
______________. The terms of the transactions are as follows:
Nature of Asset
Page 16 of 18
Cost of Asset
Lease Tenure
Lease Rentals
You are requested to arrange for the insurance, which may also be capitalized.
You are requested to issue a cheque favoring <Name of Dealer> payable at
<Location> for Rs ___________ and also forward the necessary documents for
registration of the vehicle.
Thanking you,
For ABC (India) Ltd.
Authorized Signatory
ANNEXURE V
Date: ____________
To,
Dealers Name
Address
Reg: Supply of one _______ Car leased to us by M/s Sundaram Finance Limited
Ref: Your proforma invoice dated ___________
Dear Sir/ Madam,
We hereby authorize <Employees Name & Designation> of M/s ABC (India) Limited,
whose signature is attested below, to collect the ______________ Model which is
leased out to us by < Name of Lease Finance Co.>.
All documents signed by <Employees Name & Designation> in this regard shall be
binding on the Company.
Page 17 of 18
CFO
Page 18 of 18